Last Mile Delivery Market

The Last Mile Delivery Market is expected to grow from USD 183.8 Billion in 2026 to USD 353.6 Billion by 2033, reflecting strong industry expansion and registering a CAGR of 9.8% during the forecast period from 2026 to 2033.

Last mile delivery has gradually played a key role in various trade transactions, both locally and internationally. The advent of the e-Commerce industry has led to the creation of many growth opportunities, more so since the onset of the pandemic. Major industry players experienced an exponential increase in revenues during this period; for example, Amazon generated US$513.9 Bn in 2022, a 9.4% increase from 2019. The implementation of various technological advancements is also expected to uplift the growth prospects of last mile delivery market in the coming years.

• The global last mile delivery market was valued at over US$370 Bn in 2020
• UPS, FedEx, and DHL, all operate in over 220 countries and territories
• The largest Last Mile delivery company globally is Amazon Logistics
• The B2B segment to account for the majority market share
• Asia Pacific to index the highest CAGR over the forecast period

Last mile delivery has gradually played a key role in various trade transactions, both locally and internationally. The advent of the e-Commerce industry has led to the creation of many growth opportunities, more so since the onset of the pandemic. Major industry players experienced an exponential increase in revenues during this period; for example, Amazon generated US$513.9 Bn in 2022, a 9.4% increase from 2019. The implementation of various technological advancements is also expected to uplift the growth prospects of last mile delivery market in the coming years.

Superior Last Mile Delivery Solutions Disrupt Logistics Industry

Urban mobility has a renewed outlook, chiefly driven by the upsurge of the last mile delivery market. The global last mile delivery industry offers solutions to execute the supply chain’s last phase in the entire ecosystem of delivering goods to end consumers. The last leg involves the disbursement of goods from distribution centres to a consumer’s doorstep. The inception of rapidly evolving technology has completely disrupted the logistics industry, fostering the further development of the last mile delivery system.

Technology being at its centre stage, the market is continually striving for agile and lean solutions to meet ever-changing consumer expectations. In recent years, the retail sector underwent modernization through technological advancements, transitioning brick & mortar retail outlets with a strong online presence to e-commerce platforms. This change has been the turning point in the advent of the global last mile delivery market.

e-Commerce now plays a critical role in fulfilling the demand for daily necessities. It has evolved profoundly over the last few years. As a result, the shift from conventional to online shopping has penetrated rural areas as well. The e-Commerce industry is expected to proliferate by over 30% in the coming years on the back of rising consumer demand.

The last mile delivery system is the fulcrum defining the interdependent relationship between the e-Commerce and logistics sectors. For improved efficiency, last mile delivery systems have observed rapid deployments that incorporate technologies that are designed to make these systems time efficient. For instance, the announcement of droids and fully operational medical drones such as inter-hospital drones are pioneering this change. The future of the last mile delivery market is expected to be reflected in the increased use of autonomous vehicles in the coming years.

e-Commerce Expansion, and Rise in Trade Volume to Drive the Last Mile Delivery Market

The incorporation of technological advancements to the e-Commerce industry in the recent years have uplifted consumer expectations and influenced their buying behaviours. Fairfield Market Research indicates that almost 25% of consumers are willing to shell out more money for same-day delivery. Increased digitalization and online shopping platforms have aided in the proliferation of the e-Commerce market over the last decade. A spike in online shopping has led to increased trade volumes requiring swift delivery solutions. Quicker deliveries including same-day deliveries have been prime focus areas for the e-Commerce and logistic sectors to ensure customer satisfaction. This in turn is expected to propel the need for delivery service providers, thereby fueling the expansion of the last mile delivery market.

As per the World Economic Forum, urban demand for last mile delivery solutions in the world’s top 100 cities is expected to surge by 60% over the next decade. The decline in capital investments for brick & mortar infrastructure is expected to propel market demand. The e-Commerce model removes the need for brick & mortar structures, as well as other maintenance overheads. Additionally, such business models aid in curtailing redundant expenses. These programs have aided manufacturers and companies in minimizing their cost centres, thus boosting profit margins through direct online sales in the process. Thus, traded volumes over e-Commerce platforms are expected to lead to growth developments in the last mile delivery market.

COVID-19 Impacts  

The COVID-19 pandemic led to short-term disruptions, while it facilitated long-term changes in the operational structure of the last mile delivery market. These changes have been executed based on the soaring demand for groceries and homecare products. The demand for Last Mile delivery solutions spiked owing to the increasing reliance on e-Commerce channels for the supply of daily need products and FMCG essentials. Considering the new normal defined by social distancing, this pandemic acted as a catalyst in spurring unattended, contactless, and autonomous delivering techniques/solutions.

The FMCG Sector to be a Key User Segment  

The FMCG sector is likely to retain its leading position in the last mile delivery market. The increasing number of e-Commerce platforms are expected to primarily drive the demand for online shopping, boosting the sales of perishable items such as food and beverages. This will generate newer business opportunities for services providers in the food delivery logistics industry, leading to higher usage of last mile delivery systems for a quick delivery to ensure product integrity. Improved internet access will further boost the e-tailing market, creating lucrative opportunities for the last mile delivery market. Another major key end user that is expected to also drive the expansion of the market would be the pharmaceutical industry.

Growth Challenges

High Costs and Limited Delivery Windows to Hinder Market Growth

The inflated costs associated with last mile delivery solutions, particularly for small-sized businesses that may not enjoy the economies of scale that larger companies do. This could be detrimental for these businesses to compete with bigger competitors. Moreover, customers expect the delivery of their given packages within a specified time, which could be arduous for delivery companies, leading to missed deliveries and in turn dissatisfied customers. Factors such as these are expected to potentially hinder further growth prospects for the global last mile delivery market.

The Asia Pacific is likely to retain its forefront position in terms of revenue share contribution to last mile delivery market. The introduction of e-Commerce platforms which gained momentum here due to their added convenience thus being the biggest selling point during the pandemic. Rising volumes traded over these platforms have been instrumental in keeping the demand for Last Mile delivery upbeat in the recent years. Intensifying foreign investments have also aided in contributing to this region’s share.

A strong population base, characterized by Gen-Z and millennials, has also been pivotal in this region’s success. A growing number of youngsters with adequate disposable incomes prefer to shop online, thus fueling last mile delivery solutions in this region. In addition to FMCG, the sale of personal care products, apparel, and fitness gear is also expected to result in a higher demand for last mile delivery solutions in the future, thus augmenting market growth in the process.

• A1 Express Services Inc.
• Deutsche Post AG (DHL GROUP)
• Power Link Expedite
• United Parcel Service, Inc. (UPS)
• FedEx
• XPO Logistics, Inc.
• Amazon.com
• Kerry Logistics Network Limited
• Drone Delivery Canada Corp.
• A2Z Drone Delivery, LLC

Recent Notable Developments:

• In August 2020, Target Corporation partnered with Closed Loop Partners along with other industry players for a circular economy
• In May 2020, Ryder System Inc. expanded its e-Commerce fulfilment network by incorporating food-grade capabilities including two more facilities to cater to their consumer’s needs
• In April 2020, Walmart Inc. launched Express Delivery, a new service that will deliver more items than ever before, in less than two hours

The Global Last Mile Delivery Market is Segmented as Below:

By Service

• B2B
• B2C
• C2C

By Technology

• Autonomous
• Non-autonomous

By Application

• Food & Beverages
• Retail & E-commerce
• Healthcare

By Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East & Africa